It makes my blood boil when I read journalists and other financial gurus advising people to ‘take it to the Insurance and Savings Ombudsman’ if you’re not happy with the outcome of your claim. The reality is that taking a claim to the ombudsman is extremely complex and not a ‘given’.
The Office of the Insurance and Savings Ombudsman is a last resort, and will only look at you when you present a letter of deadlock from your insurer. This is a literal, physical letter from your insurer advising you that they will not budge, and neither it seems will you, so the claim is at deadlock. Only then will the Ombudsman consider your claim – but there is plenty of water that has to go under the bridge before then.
The Office of the Insurance and Savings Ombudsman will insist that you exhaust every avenue, every process and every appeal available to you through your insurer before bringing the issue to them – they must be convinced that you have exhausted every avenue with your insurer, and the letter of deadlock is evidence of that.
Very few cases go through to the Insurance and Savings Ombudsman, because the insurer is always going to try and resolve it. If the call is marginal, they will err on the side of paying out the claim because it does not look good for their reputation, and they would far rather avoid the time and money involved in the disputes resolution process.
A client of mine recently had her house burgled, and a string of pearls was stolen. The pearl necklace was originally owned by her mother and was purchased in the 1960s. The insurer offered a pay-out of $300 because, they said, pearls were expensive in the 1960s and it is unlikely her mother could have afforded to buy an authentic string of pearls.
I called the insurer up and asked them if they really thought they could win this in court. Did they seriously believe a court would accept their guess that the pearls were not real when they had absolutely no knowledge of the client, her mother or their circumstances? They came back to me within four hours with a settlement of $3,000.
A declined claim is never the end, and the Insurance and Savings Ombudsman is always a last resort. Most often these things can be settled amicably by following the process with your insurer.